Explained: What happens when a law-enforcement agency like ED attaches a property

The Enforcement Directorate (ED) Thursday provisionally attached immovable properties worth over Rs 50 crore belonging to former Finance Minister P Chidambaram’s son Karti in connection with the INX Media case. The properties include a bungalow in Somerset, United Kingdom, a tennis club in Barcelona, Spain, agricultural land in Kodaikanal, a bungalow in Ooty, 50% of a house owned by Karti and his mother Nalini in Jor Bagh, New Delhi, and fixed deposits of Rs 90 lakh.

The attachments have been made under provisions of the Prevention of Money Laundering Act (PMLA). The case was registered on the basis of a CBI FIR that alleged corruption in the grant of Foreign Investment Promotion Board (FIPB) approval for foreign direct investment in INX Media.

Provisional attachment

According to Section 5 of PMLA, the Director of ED or any other officer (Deputy Director and above) authorised by him can issue orders for attachment of a property that is suspected to have been acquired with the proceeds of crime in a case of scheduled offence. The attachment order is issued if the Director feels that “such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime”.

READ | ED attaches Karti Chidambaram’s assets worth Rs 54 crore in India, UK, Spain

The order is valid for 180 days. If it is not confirmed by an ED-appointed Adjudicating Authority by then, the property is automatically released.

Property that is abroad

Properties in foreign locations can be attached after a Letter Rogatory is sent through a competent court to the concerned country. The relevant authority in that country then attaches the property.

During the first 180 days

Because the attachment is provisional, the accused can continue to enjoy the property. The ED will have the power to claim possession only after the Adjudicating Authority confirms the attachment. There is hardly any PMLA attachment that the Adjudicating Authority has refused to confirm so far.

After the confirmation

The accused has the right to challenge the Adjudicating Authority’s confirmation order at the PMLA’s Appellate Tribunal within 45 days. If the Appellate Tribunal too confirms the order, the accused can file a plea in the High Court, and so on. Unless the property is released along the way, it shall remain out of bounds for the owner until the trial is completed. Following final confirmation, in case of a residential property, the ED will ask the owner to vacate the premises along with his belongings, and will take over possession.

In case of a conviction, the trial court may order confiscation of the attached property, and vest the rights to the property with the central government.

Attaching only a part

It is difficult to implement on the ground the part-attachment of a property, such as 50% of Karti Chidambaram’s Jor Bagh house. If the property has just one entrance, for example, sealing could violate the fundamental rights of the joint owner. An earlier case in which the ED had tried to attach 50% of a plot of land, the matter went to the Delhi High Court, which ordered that the accused should retain possession of the entire land, but pay rent for half the plot to the ED.

Sitting and decaying

Attached properties may remain locked for years, and start crumbling. There is a provision for a body to maintain such properties, but it has not been set up yet. Attached vehicles are sent to warehouses owned by the Central Warehousing Corporation, where the ED pays to park the vehicle. As cases drag on for years, the vehicles rot. At the end of the trial, neither the accused nor the ED recovers anything from the vehicle. The agency could, in fact, end up paying more rent than the value of the vehicle.